TaxTMI 
TaxTMI 
2015 (1) TMI 63
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch dismissed its appeal. Therefore, the Respondent- Trust carried the matter before the Tribunal, which passed the impugned order. Hence, the present appeal. 3. The appellant-Revenue has, by way of this appeal, raised the following question of law for our consideration; "(A) Whether the ITAT is justified in law as well as on facts in directing recognition u/s. 80G(5) of the Income Tax Act to the assessee Trust?" 4. At the outset, Mr. Desai, learned Advocate for the appellant, very fairly invited our attention to a decision of this Court rendered in Tax Appeal No. 306 of 2014 and the allied matters, wherein, this Court answered the very same issue in favour of the assessee and against the Revenue by observing as under in Para-7 thereof; "7.0. Heard the learned advocates for the respective parties at length and perused the order passed by the learned Commissioner as well as impugned judgment and order passed by the learned Tribunal. At the outset, it is required to be noted that the question is with r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp; "Where the institution or fund derives any income such income would not be liable to inclusion in its total income under the provisions of ss. 11 and 12 [or clause (22) or clause (22A) or clause (23) or clause (23AA) or clause (23C) of s. 10". Before embarking on analysing the provisions of subs.(5) of s. 11(1), one must notice that s. 11(1) does not relate to assessment of the trust or the institution whose income are not liable to be included in the computation of taxable income under various provisions of the Act referred therein. Primarily, s. 11(1) is related to giving deduction in respect of donations made by a person who, but for this provision, would not be eligible for such deduction because the donations are not ordinarily considered to be expenses incurred for the purpose of earning income and liable to be deducted therefrom. Since all donations generally are not treated eligible for deduction, but only such donations as are made to funds or institution named in subs. (2) of s. 11(1) are eligible for such deduction and as noticed by us above, it also includes a general clause "any fund or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....und is such whose income is not liable to be included in the computation of total income it depends on its status or character. The second is actual assessment of income, which necessarily takes place in future after donation is received by the donee on fulfillment of other conditions about application of income by the eligible trusts, which in the very nature of things can operate only after receipt of income. The actual extent of exclusion from or inclusion in the computation of total income, the receipts of such institution or fund, depends on fulfillment of further conditions which may or may not exist at the close of the year and has no direct relation to the purpose with which the provision is made. The latter falls in the realm of the assessment of the trust, institution or fund which derives income which is not ordinarily includible in its total income. The liability to assessment is not affected by issuance of recognition certificate or approval certificate issued under clause (vi) of subs. (5) of s. 11(1) nor it depends upon the fact whether donor is ultimately gets deduction in respect of such donation. It may be relevant to take cognizance that all donations are not in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee. The two conditions speak out, firstly, that income derived from property to the extent to which such income is applied to such purposes in India is not to be included in the computation of total income and it is only where there is accumulation of income, such accumulation exceeds 25 per cent shall not be liable to be exempt from income but in case accumulation is restricted to 25 per cent even accumulation is not to be included in the computation of total taxable income. That too is not in absolute terms. In that regard subs. (2) of s. 11 points out certain conditions and contingencies in which that limit is also relaxed. We need not dilate here in detail on this aspect. This we have noticed only for the purpose of showing, firstly, that as on the date when donation is made which is the relevant date for the purposes of claim of donor to deduction under s. 11(1) it is not possible to point out what shall be the exact state of affairs that will exist at the close of the year nor is it possible for the person considering the application for approval, which requires to consider whether the income derived by such trust would not be liable to be included in its total inco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e (23) or clause (23AA) or clause (23C) would go to show that these clauses identified different institutions for the purpose of granting exemptions, some of which require approval by publication in Official Gazette, some of which require to bear a particular character or the like. Once that character or the condition is fulfilled, s. 10 operates. For illustration, under clause 22, as it was in force upto 31st March, 1999, any income of a university or other educational institution existing solely for educational purposes and not for purposes of profit was not to be included in total income. Now, if an approval is sought by such institution what the approving Authority can seek to enquire is whether the applicant university or educational institution which is solely existing for educational purposes, and whether its purpose is not to earn profit. Under clause (23) exemption is in respect of income of an association or institution established in India which may be notified by the Central Government in the Official Gazette having regard to the fact that the association or institution has as its object the control, supervision, regulation or encouragement in India of the games of cric....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pon the facts existing at the close of the assessment year and at the time of considering the application it cannot be examined in the light of what is going to happen in pending assessments in respect of which approval certificate was already existing and assessment of which would not affect the donations made to the trust during that year." 5. Mr. Desai, however, submitted that the aforesaid decision would not apply to the facts of the case on hand, and therefore, the Tribunal erred in passing the impugned order. He, further, submitted that the Tribunal ought to have appreciated the fact that the principle which will apply at the time of registration of a Trust under Section 12AA of the Act does not apply in same manner, while recognizing the donations made to it. He, then, submitted that for the purpose of benefit of Section 80G, it is necessary that no income under either Section 11 or Section 12 is included in the total income of the trust. He, then, lastly submitted that the Tribunal ought to have appreciated the fact that the assessee had not spent nearly 85 per cent of the amount towards the object of the trust. He, therefore, submitted that the appeal be allowed. 6. Havi....